Prague Economic Papers 2002, 11(1):39-56 | DOI: 10.18267/j.pep.187

Selected factors influencing the money demand development in the czech republic in 1994 - 2000

Josef Arlt1, Milan Guba2, ©těpán Radkovský2, Vladimír Stiller2, Milan Sojka3
1 University of Economics, 4, W. Churchill Sq., CZ - 130 67 Prague 3 (e-mail: Arlt@vse.cz).
2 Czech National Bank, Na Příkopě 28, CZ - 115 03 Prague 1 (e-mail: Milan.Guba@cnb.cz; Stepan.Radkovsky@cnb.cz; Vladimir.Stiller@cnb.cz).
3 Faculty of Social Sciences of Charles University, Opletalova 26, CZ - 110 00 Prague 1 (e-mail: sojka@mbox.fsv.cuni.cz).

The demand for money represents one of the most important components of the transmission mechanism. Its analysis plays an important role in the decision-making process of central banks dealing with monetary policies. This paper follows a post-Keynesian approach to the analysis of the demand for money. The econometric analysis is based on the Arestis's model, adjusted for the conditions of the Czech Republic. The cointegration analysis on the basis of both the VAR and ADL models is applied. The premise is confirmed that the demand for money in the Czech Republic from 1994 - 2000 had developed in the long-run mostly under the influence of GDP and interest rate development. This conclusion is valid for balances in both real and nominal money.

Keywords: money demand, time series, econometric model, cointegration analysis
JEL classification: C22, C32, C51, C52, E41

Published: January 1, 2002  Show citation

ACS AIP APA ASA Harvard Chicago IEEE ISO690 MLA NLM Turabian Vancouver
Arlt, J., Guba, M., Radkovský, ©., Stiller, V., & Sojka, M. (2002). Selected factors influencing the money demand development in the czech republic in 1994 - 2000. Prague Economic Papers, 11(1), 39-56. doi: 10.18267/j.pep.187
Download citation
  • BibTeX (.bib)
  • Bookends (.ris)
  • EasyBib (.ris)
  • EndNote (.enw)
  • EndNote 8 (.xml)
  • ISI WoS (.isi)
  • Medlars (.medlars)
  • Mendeley (.ris)
  • MODS (.xml)
  • Papers (.ris)
  • RefWorks (.txt)
  • RefManager (.ris)
  • RIS (.ris)
  • MS Word (.xml)
  • Zotero (.ris)
    • Open full article

    References

    1. Arestis, Ph. (1988), "The Demand for Money in Small Developing Economies: An Application of the Error Correction Mechanism," in Arestis, Ph., ed., Contemporary Issues in Money and Banking. Cheltenham: Edward Elgar, pp. 184-205.
    2. Arestis, Ph., Sawyer, M. C. (1998), The Political Economy of Central Banking. Cheltenham: Edward Elgar.
    3. Arlt, J., Guba, M., Matalík, I., Stiller, V., Syrovátka, J. (1998), "Definition and Primary Relation Analysis of the Monetary Transmission Mechanism in the Czech Republic" (in Czech). Prague, Czech National Bank.
    4. Arlt, J. (1995), "The Problem of Cointegration." Bulletin of the Czech Econometric Society, (2), pp. 3-12.
    5. Arlt, J. (1999), Modern Methods of Economic Time Series Modelling (in Czech). Prague: Grada.
    6. Banerjee, A., Dolado, J. J., Galbraith, J. W., Hendry, D. F. (1993), Cointegration, Error Correction and the Econometric Analysis of Non-stationary Data. London: Oxford University Press. Go to original source...
    7. Baumol, W. J. (1952), "The Transaction Demand for Cash: An Inventory Theoretic Approach." The Quarterly Journal of Economics, 66 (4), pp. 546-556. Go to original source...
    8. Bondt, G. J. (1998), "Credit and Asymmetric Effects of Monetary Policy in Six EU Countries: an Overwiev." De Nederlandsche Bank, NV.
    9. CNB (1997), "Influence of Selected Factors on Demand-for-Money Developments in the Period 1993 - 1996" (in Czech). Prague, Czech National Bank.
    10. Davidson, P. (1994), Post-Keynesian Macroeconomic Theory. Cheltenham: Edward Elgar.
    11. Doornik, J. A., Hendry, D. (1997), Modelling Dynamic Systems Using PcFiml 9.0 for Windows. London: International Thomson Business Press.
    12. Dornbusch, R., Fischer, S. (1994), Macroeconomics (in Czech). Prague: SPN and Economics Foundation.
    13. Engle, R. F., Granger, C. W. J. (1987), "Cointegration and Error Correction: Representation, Estimation and Testing." Econometrica, 55, pp. 251-276. Go to original source...
    14. Hanousek, J., Tůma, Z. (1995), "Demand for Money in the Czech Economy" (in Czech). Finance a úvěr, (5), pp. 249-267.
    15. Heyne, P. (1991), Economic Style of Reasoning. Prague: University of Economics.
    16. Johansen, S. (1991), "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models." Econometrica, 59, pp. 1551-1580. Go to original source...
    17. Johansen, S. (1995), Likelihood-Based Inference in Cointegrated Vector Auto-Regressive Models. London: Oxford University Press. Go to original source...
    18. Johansen, S., Juselius, K. (1990), "Maximum Likelihood Estimation and Inference on Cointegration - with Applications to Simultaneous Equations and Cointegration." Journal of Econometrics, 69, pp. 169-210. Go to original source...
    19. Keynes, J. M. (1953), The General Theory of Employment, Interest, and Money. San Diego, New York, London: Harcourt Brace Jovanovich.
    20. Keynes, J. M. (1937), "The General Theory of Employment." Quarterly Journal of Economics, 51, pp. 209-223. Go to original source...
    21. Keynes, J. M. (1937), "The Ex-Ante Theory of the Rate of Interest." The Economic Journal, 47, pp. 663-669. Go to original source...
    22. Klacek, J., ©mídková, K. (1995), "The Demand-for-Money Function the Case of the Czech Economy." Prague, Institute of Economics of the Czech National Bank, Working Paper.
    23. Laidler, D. E. W. (1966), "Some Evidence on Demand for Money." Journal of Political Economy, 74 (1), pp. 55-68. Go to original source...
    24. Laidler, D. E. W. (1993), The Demand for Money: Theories, Evidence and Problems (4th ed). New York: Harper Collins College Publishers.
    25. Lavoie, M. (1992), Foundations of Post-Keynesian Economic Analysis. Cheltenham: Edward Elgar.
    26. Moore, B. J. (1998), "Money and Interest Rates in a Monetary Theory of Production," in Rotheim, R. J., New Keynesian Economics/Post-Keynesian Alternatives. London and New York: Routledge.
    27. Rose, P. S. (1992), Money and Capital Markets (in Czech). Prague: Victoria Publishing.
    28. Sojka, M. (2000), The History of Economic Theories (in Czech). Prague: Karolinum.
    29. Sojka, M. (1999), John Maynard Keynes and Contemporary Economy (in Czech). Prague: Grada.
    30. Sojka, M. (1996), Milton Friedman (in Czech). Prague: Epoch.
    31. Sriram, S. S. (1999), "Survey of Literature on Demand for Money: Theoretical and Empirical Work with Special Reference to Error-Correction Models." Washington, IMF. Go to original source...
    32. Stock, J. H. (1987), "Asymptotic Properties of Least-Square Estimators of Cointegrating Vectors." Econometrica, 55, pp. 1035-1056. Go to original source...
    33. Tobin J. (1956), "The Interest-Elasticity of Transactions Demand for Cash." The Review of Economics and Statistics, 38 (3), pp. 241-247. Go to original source...
    34. Tobin J. (1958), "Liquidity Preference as Behavior Towards Risk." The Review of Economic Studies, 25 (67), pp. 65-86. Go to original source...

    This is an open access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY NC ND 4.0), which permits non-comercial use, distribution, and reproduction in any medium, provided the original publication is properly cited. No use, distribution or reproduction is permitted which does not comply with these terms.


    Return to the content